Expat tax modifications for South Africa defined

South African expatriates have been held in suspense over a proposed change in the law aimed at relieving those unable to leave the country under lockdown.

This change was confirmed with the publication of the Tax Amendment Act (TLAA) on January 20, 2021, which means that these expatriates can now easily rest, says Jean du Toit, Head of Tax Technical at Tax Consulting SA.

According to the change, South African resident taxpayers who receive their remuneration for services provided abroad can receive an income tax exemption of up to R1 1.25 million, he said.

To qualify for the exemption, Section 10 (1) (o) (ii) of the Income Tax Act provides that taxpayers must spend a total of more than 183 days outside South Africa, of which more than 60 days must be continuous, during a period of twelve months .

“However, due to the travel bans imposed as a result of the Covid-19 pandemic, these people could not travel to their countries of employment,” said Du Toit.

“For many, this would mean that they would not have reached the 183-day threshold, which would result in a massive unexpected South African tax liability.”

The TLAA lowers the 183-day threshold by 66 days, which means taxpayers who have spent more than 117 days outside of South Africa can still benefit from the exemption.

The 66 day reduction is based on the period that started March 27, 2020 and ended May 31, 2020 when the country operated under Covid-19 alert levels 5 and 4.

Reservations and benefits

Du Toit said there were important caveats to be aware of with this amendment.

The uninterrupted period of more than 60 days remains unchanged; The concession only covers the total number of days outside South Africa, he said.

“It is equally important that this change is not a permanent change in the exemption. It is only valid for a period of 12 months for a valuation year ending on or after February 29, 2020, but on or before February 28, 2021. “

He added that taxpayers can take advantage of the exemption over multiple tax years.

“This principle, which can be referred to as“ double diving, ”can be difficult to apply properly.

“This will be especially the case in connection with the change, as it is limited to very specific periods of time. It still applies, however, and taxpayers need to plan proactively to ensure they are applying the exemption correctly and to their greatest benefit. ”


Du Toit said the change was not part of the original 2020 budget proposals and was only introduced when the national treasury and SARS issued their official response document after hearing public comments on the draft tax laws.

“After its inception, the proposal was incorporated into the final law amending tax laws, which was submitted to Parliament on October 28, 2020.

“While the taxpayers concerned were pleased to hear of the relief, the change was not yet law at the time. It would have been unprecedented if the amendment had not been approved by Parliament, but taxpayers would not be able to make any assumptions before it was published.

“In any case, those who will benefit from the change can now breathe a sigh of relief.”

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